Anti-corruption compliance program

Transcription

1 Anti-corruption compliance program

2 Table of contents 1 Introduction Ethics Code of Conduct and Anti-corruption The Norwegian penal code against corruption The U.S. Foreign Corrupt Practices Act The Anti-corruption compliance function Ethics commitees Risk assessment Rules for contact with public officials Training Procurement procedures Integrity due diligence - Red flags Social Investments Anti-corruption liability in joint ventures Successor liability

3 This document provides a brief overview of the main U.S. and Norwegian anti-corruption laws and regulations, relevant parts of Ethics Code of Conduct in Statoil and sets out additional procedures and requirements that must be followed. Statoil will not tolerate any form of corruption, and will make active efforts to ensure that it does not occur in our business activities. Statoil s attitude is that we will not only comply with all applicable laws and regulations, but will also act in an ethical and socially responsible manner in accordance with Statoil s Ethics Code of Conduct. Breaches of Statoil s ethical guidelines or contravention of applicable laws may result in disciplinary action, including dismissal and reports to the relevant authorities. Helge Lund President and CEO 4

4 The Anti-corruption compliance program outlines the most important elements of Statoil s efforts to combat corruption. Introduction 1 The program includes the main elements from Statoil s Ethics Code of Conduct (FR18) and other governing documents, policies and procedures related to anti-corruption and a description of Norwegian and US anti-corruption laws. These legal texts are complicated and not always easily accessible. However, knowledge about relevant laws and regulations is essential to increase awareness of the fact that corruption might occur in many different ways. Relevant anti-corruption legislation is therefore included in our training programs. This program is available for all employees on Entry on the Ethics and Anti-corruption webpage The Ethics and Anti-corruption webpage on Entry is an important tool to gain knowledge and stay updated with regard to ethics in Statoil and Statoil s Anti-corruption compliance program. 6 7

5 Ethics Code of Conduct and Anti-corruption 2 Statoil s Ethics Code of Conduct (FR18) contains a number of important sections meant to prevent corruption and bribery from occurring in the Group s activities. 2.1 Code of business practices Combating corruption (FR18 section 3.3 extract) Corruption includes bribery and trading in influence. Corruption undermines legitimate business activities, distorts competition, ruins reputations and exposes companies and individuals to risk. Statoil is against all forms of corruption and will make active efforts to ensure that it does not occur in the Group s business activities. Bribery exists when an attempt is made to influence individuals in the conduct of their duties, through the provision of an improper advantage. Trading in influence exists when an improper advantage is provided to someone in order to influence the performance of a third party s duties. Facilitation payments are payments aimed at expediting or securing the provision of products or services to which one has a rightful claim. Statoil is against the use of this type of payment even in cases where such payments may be legal. Statoil will work actively to prevent such payments. However, if the individual believes that their own or another s life or health may be in danger, making a facilitation payment is permissible. Such payments must be correctly described in expense accounts and reported to the business area s ethics committee as soon as possible. Statoil may be held liable for bribery or any other corrupt acts by third parties contracted by Statoil or in other situations where Statoil may benefit from bribery or corrupt acts by third parties. Use of intermediaries (FR18 section 3.6) Intermediaries include agents, consultants and others who, in the Group s business activities, act as links between Statoil and a third party. Before intermediaries are hired, the manager must initiate a mandatory integrity due diligence to ensure that the intermediary s reputation, background and abilities are appropriate and satisfactory (see Ethics Code of Conduct section 5.3). Statoil expects that intermediaries act in accordance with Statoil s ethical requirements and this condition must be included in the intermediary s contract with Statoil. 8 9

6 Agreements with intermediaries must be made in writing and describe the true relationship between the parties. The agreed compensation must be proportionate to the service rendered. Payments shall only be made against satisfactory documentation and must be accounted for in accordance with generally accepted accounting principles. The performance of the intermediary relative to Statoil s ethical requirements should be regularly monitored and remedial action taken if performance falls short. Use of lobbyists (FR18 section 3.7) A lobbyist is a special type of intermediary used to influence decisions, both in the public and private sector. It is only permitted to use a lobbyist if such person fully discloses to the person or body Statoil wishes to influence that they represent Statoil. It is therefore an absolute requirement that all our contracts with lobbyists impose an obligation on the lobbyist to disclose this information. The principles for use of intermediaries also apply to lobbyists. 2.2 Code of personal conduct Corruption (FR18 section 4.3) The prohibition against corruption described in the Ethics Code of Conduct section 3.3 applies for all individuals acting on Statoil s behalf. In case of a violation, the Group may be fined and individuals may be fined and/or imprisoned. The prohibition includes facilitation payments. However, if the individual believes that their own or another s life or health may be in danger, making a facilitation payment is permissible. Payments must be correctly described in expense accounts and reported to the business area s ethics committee. Gifts, hospitality and expenses (FR18 section 4.4 extract) The individual must not, directly or indirectly, accept gifts except for promotional items of minimal value normally bearing a company logo. Other gifts may be accepted in situations where it would clearly give offence to refuse, in which case the gift must be handed over immediately to Statoil and will be regarded as Statoil property. Hospitality such as social events, meals or entertainment may be accepted by the individual if there is a clear business reason. The cost of any hospitality must be kept within reasonable limits. Travel, accommodation and other expenses for the individual themselves in connection with such hospitality must always be paid by Statoil. The above principles also apply in the reverse direction, so that no individual acting on behalf of Statoil may, in their dealings with customers, suppliers and other parties, offer or agree to pay for gifts, hospitality or other expenses that would violate these principles. Particular care must be taken in dealings with public officials. 2.3 Practice and follow-up (FR18 chapter 5 extract) The individual must ensure that they are familiar with and perform their duties in accordance with the requirements set out in Ethics Code of Conduct and applicable laws and regulations. Managers must ensure that all activities within their area of responsibility are carried out in accordance with the requirements set out in the Ethics Code of Conduct and this document. Managers are responsible for communicating the requirements and for providing advice with respect to the interpretation and application of the policies and rules. If the individual comes across cases of ethical doubt and breaches of Statoil s ethics requirements, these concerns must be reported immediately. Individuals can report the concern through the regular channels; to their superior, or to their superior s superior, or to the internal entity whose duty it is to follow up such matters. A manager who receives such a query must consult his/her own superior in cases of doubt. However, if the individual is uncomfortable using regular channels for any reason the concern can be reported to Statoil s ethics helpline ( which is available in all countries in which Statoil is represented. The individual may remain anonymous if they so wish. Statoil will not implement sanctions in any form against any individual who, in a responsible manner, informs persons in positions of responsibility, internal entities or relevant authorities about possible breaches of Statoil s ethical guidelines, applicable laws or other blameworthy circumstances in Statoil s business. Breaches of the Group s ethical requirements or relevant statutory provisions may result in disciplinary action, or dismissal with or without notice, and may be reported to the relevant authorities

7 The Norwegian penal code against corruption Introduction Norway enacted new provisions (penal code sections 276a, 276b and 276c) on corruption and trading in influence as of 4 July 2003,. These provisions are regarded as among the strictest in the world. The Norwegian penal code against corruption and trading in influence applies to corrupt conduct regardless of whether it is committed by Norwegians or foreign persons or companies. Complicity in a crime under these new sections is punishable in the same manner. It should be noted that Statoil s Ethics Code of Conduct entails stricter provisions than what is subject to penalization in accordance with Norwegian and US anti-corruption legislation. 3.2 Corruption Section 276a is the main provision against corruption and states: Any person who a) for himself or other persons, requests or receives an 12 13

8 improper advantage or accepts an offer of an improper advantage in connection with a position, office or assignment, or b) gives or offers anyone an improper advantage in connection with a position, office or assignment, shall be liable to a penalty for corruption. By its terms, this prohibition against corruption does not require anything in return from the person receiving any advantage. This is different from the United States Foreign Corrupt Practices Act (FCPA), which contains specific requirement related to the purposes of paying the bribes ( quid pro quo requirement ). The only requirement under the Norwegian act is that there is a connection between the improper advantage and the receiver s position, office or assignment. Passive and Active Corruption Paragraph (a) is directed against the person who receives, requests or accepts an offer of an improper advantage ( passive corruption ) in connection with a position, office or assignment. The individual requesting an improper advantage does not need to specify what is requested; it is sufficient to express an expectation that some improper advantage will be provided by the other party, either for oneself or for others. Punishment may also be imposed on a person who receives an improper advantage in connection with a position, office or assignment. This alternative is of practical significance when no request for, or offer of such an advantage has been made in advance, or where this cannot be proved. The question of who has taken the initiative in giving the advantage is immaterial. The recipient may be punished even if he or she only passively receives a bribe. Section 276a, first paragraph, sub-item (b) concerns the active party to bribery and provides for punishment of a person who gives or offers anyone an improper advantage in connection with a position, office or assignment ( active corruption ).The alternative offer is applicable when the active party to bribery offers anyone an advantage in return for specific conduct, not only when that conduct is taken in the future or present, but also when an act or omission has already taken place. Advantage As used in the act, an advantage is anything of value. Normally, the value is financial and a bribe typically consists of money or services or objects having monetary value. However, no independent financial value is necessary; everything that the passive party finds in his or her interest or from which a benefit can be derived may be regarded as an advantage within the meaning of the act. The benefit does not have to be received by the passive party. Advantages intended to benefit persons other than the passive party may also be the basis for violation of the act. Even advantages bestowed on charitable organizations may in some more extraordinary cases constitute grounds for punishment pursuant to section 276a. Improper An advantage may only constitute ground for punishment if it is improper, that is, when a clearly blameworthy act has occurred. If the advantage has a financial value, this value generally forms the basis for assessment of impropriety. Very small gifts and other advantages are normally not improper, nor is payment commensurate with work carried out. Normal entertainment or advantages on a scale in accordance with custom or internal guidelines of the passive party s employer or principal will rarely be deemed improper. The result of the assessment of impropriety may depend on the posts or positions of the parties concerned and the relationship between them. The purpose of the provision of an advantage will be a central factor in assessing its impropriety. An advantage intended to influence the passive party s performance of his or her duties will be improper, unless it is small, known to and approved by, the employer or principal. Where the employer or principal is informed before the advantage is offered or received and no objection is made, it should be rare to characterize the advantage as improper. The term improper advantage is a legal standard that means that its content will develop over time to be aligned with the general public understanding. Position, Office or Assignment Both passive and active corruption apply to advantages associated with the passive party s position, office or assignment. The terms position, office or assignment have a broad scope and include all types of public and private 14 15

9 employment or authority. The FCPA only covers bribes paid to non-united States public officials, and thus has a more limited scope compared to the Norwegian act. In general, however, public officials are subject to stricter standards than employees of private undertakings. Corruption in connection with a position refers to an act of corruption committed in connection with ordinary service or employment. The term office covers corruption committed by or in relation to persons with political office, board appointments or other positions of trust. It is not a requirement that the passive party to bribery receives remuneration for the position of trust, and it is immaterial whether the person concerned occupies the position by virtue of election or appointment. The term assignment applies in cases where, for example, a lawyer, consultant or estate agent having authority to only act in a limited capacity for a principal, enterprise, organization or public agency requests or receives improper advantages. Acts of corruption in contracts of very brief duration may also be punished pursuant to sections 276a. In connection with Section 276a applies only where advantages are offered, requested, given or received in connection with the position, office or assignment of the passive party to the bribery, that is, where there is a relation between the advantage and the position, office or assignment held. The advantage normally involves a benefit provided in return for something that the passive party to the bribery does or omits to do in performing his or her duties. However, the bribe does not have to be related to a specific action or omission. Pure cases of oiling or greasing are covered by the prohibition, providing the advantage is improper and is clearly associated with the passive party s position, office or assignment. 3.3 Facilitation payments It is not unusual that public officials in a number of countries refuse to carry out their work unless they have an additional financial incentive to do so. Such payments are often referred to as facilitation payments and may in many instances contain elements of extortion. Facilitation payments are prohibited by the provisions in the Norwegian penal code against corruption, but only if the advantage offered or given to the foreign official is improper, as discussed above. Some such payments are generally not considered improper. For example, persons who feel compelled to give a foreign public official a small payment in order to ensure the return of a passport or in order to be permitted to enter or leave a country are generally not subject to punishment pursuant to the provisions against corruption. The Ministry of Justice has stated there should be a high threshold for criminalizing payments made in order to obtain something to which the payer is legally entitled. Local legislation with respect to facilitation payments may differ from country to country. In some countries the legislation has a zero tolerance against facilitation payments. 3.4 Gross corruption Section 276b contains provisions for severe forms of corruption (gross corruption) and has the following wording: In deciding whether the corruption is gross, importance shall be attached to, inter alia, whether the act has been committed by or in relation to a public official or any other person in breach of the special confidence placed in him by virtue of his position, office or assignment, whether it has resulted in a considerable economic advantage, whether there was any risk of considerable damage of an economic or other nature, or whether false accounting information has been recorded, or false accounting documents or false annual accounts have been prepared. In assessing whether or not an act of corruption is gross, emphasis shall thus be placed on whether the act has been carried out by or in relation to a public official or any other person in breach of the special confidence placed in him as a consequence of his position, office or assignment. Also relevant is whether the act has resulted in a significant economic advantage. Emphasis shall also be placed on whether there was a risk of damage of an economic or other nature. If there was a risk of serious personal injury, damage to the environment or other significant damage of non-economic nature, the offence would normally be regarded as gross

10 There is no requirement that damage has occurred. It is sufficient that the offence involved a risk of considerable damage of an economic or other nature. Emphasis shall also be placed on whether false accounting information has been recorded or whether false accounting documents or false annual accounts have been prepared. The list of factors stated in section 276b, second paragraph, is not intended to be exhaustive. Since violation of section 276b may result in imprisonment up to ten years, the authorities may be entitled to make use of extraordinary investigatory measures such as telephone tapping and house and office searches without notifying the indicted. 3.5 Trading in influence Section 276c extends the scope of corruption to include trading in influence and has the following wording: Any person who a) for himself or other persons requests or receives an improper advantage or accepts an offer thereof in return for influencing the performance of a position, office or assignment, or b) gives or offers anyone an improper advantage in return for influencing the conduct of a position, office or assignment, shall be liable to penalty for trading in influence Both alternatives in the first paragraph concern improper advantages requested, offered, given or received to or by a middleman in return for influencing a third person s conduct of his duties in a position, office or assignment. The assessments related to the terms requests, receives, accepts, gives, offers, advantage, position, office and assignment are the same as described under section 276a. Assessment of the term improper may differ somewhat from that in relation to section 276a. In the impropriety assessment, the degree of openness will often be decisive. For example, where lobbying activity is concerned, the decisive factor will, as a rule, be whether the lobbyist states that he or she is acting on behalf of a client. If the influencing agent omits to inform that he or she is acting on commission for another and has no reason to believe that the person whom he or she is attempting to influence has been informed of this in another way, the general rule is that such conduct is to be regarded as improper. 3.6 Penalties Section 276a provides that corruption may be punished by fines or imprisonment for a term not exceeding three years. Section 276b provides that gross corruption may be punished by imprisonment for a term not exceeding ten years. Section 276c provides that trading in influence may be punished by fines or imprisonment for a term not exceeding three years

11 4.1 Introduction The U.S. 4 Foreign Corrupt Practices Act The United States Foreign Corrupt Practices Act ( FCPA ) was enacted in The FCPA contains the following substantive provisions: Anti-bribery provisions Books & Records and Internal Controls Provisions Statoil ASA is covered by the FCPA because it is listed on a U.S. stock exchange and thus qualifies as an issuer of securities in the U.S. Likewise, all Statoil employees, officers, directors and agents who violate the FCPA may individually be liable and subject to penalties, when acting on behalf of the company, whether or not the corporation itself is found liable for a violation. Statoil can also be liable for the acts of its employees, officers, directors or agents. The part of the FCPA that applies to issuers and their employees is incorporated into the US Securities Exchange Act of 1934 ( Exchange Act ). Both the Securities and Exchange Commission ( SEC ) and the Department of Justice ( DOJ ) enforce the FCPA against 20 21

12 issuers like Statoil, with the SEC exercising power to seek both civil fines and injunctions and the DOJ having criminal enforcement power in the form of fines and imprisonment. In addition both the SEC and the DOJ may seek disgorgement ( inndragning ) of any profit obtained, or sought to be obtained, from the bribery. 4.2 The Anti-bribery provisions The most important part of the anti-bribery section of the FCPA contains the following wording (Section 30 A of the Exchange Act): It shall be unlawful for any issuer... to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any foreign official for purposes of (A) (i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or (B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to any person. The elements that must therefore be established to prove a violation of the anti-bribery provisions are: 1) the jurisdictional nexus, 2) the knowledge, 3) the offer, payment, promise to pay or authorization of payment, 4) anything of value, 5) to a foreign official, 6) corruptly, 7) inducing or influencing a foreign official or government, or securing any improper advantage and 8) assist the issuer in obtaining or retaining business with any person. Each of these elements will be commented upon below: 1. Jurisdictional nexus ( legal connection ) The act of bribery needs to have the necessary jurisdictional nexus to the U.S. The requirement of the FCPA is that a non-u.s. issuer has made use of the mails or any means or instrumentality of interstate commerce. Very little contact with the United States is needed in order to satisfy this requirement of the FCPA. The means or instrumentality portion of the requirement may be satisfied by a single fax, phone call, , money or wire transfer to or from the United States. The in furtherance of requirement may be met even where use of the instrumentality is incidental to the proscribed offer or payment. Where payments are made in dollars cleared or transferred through any U.S. bank, the jurisdictional nexus may be satisfied. 2. Knowledge The fact that an actual or attempted payment has been made to a foreign (non-us) official is not by itself a violation of the FCPA. To violate the FCPA, a person must also know that his or her payment is going to, or is intended for, a foreign official. The term knowing includes conscious disregard or deliberate ignorance of the facts. The FCPA provides that: A person s state of mind is knowing, with respect to conduct, a circumstance or a result if (i) such person is aware that such person is engaging in such conduct, that such circumstance exists or that such result is substantially certain to occur; or (ii) such person has a firm belief that such circumstance exists or that such result is substantially certain to occur.[k]nowledge is [also] established if such a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist. Moreover, knowing, under the FCPA, does not only mean actual knowledge of payment. It also applies to what a reasonable person could have or should have known and encompasses the concept of willful blindness. This means that those who take deliberate efforts to avoid knowledge of facts available to them are presumed to have the knowledge they seek to avoid. In the context of the FCPA, e.g. avoiding due diligence in the initial hiring or retaining of foreign agents, can amount to willful blindness, which in turn will qualify as knowledge. Conversely, conducting appropriate due diligence can rebut 22 23

13 an inference of willful blindness. Ignoring facts that indicate improper activities so-called red flags can also constitute circumstantial evidence of willful blindness Whether the element of knowledge will be satisfied very much depends on the particular facts of each case. 3. The Offer, Payment, Promise, or Authorization of a payment While an actual payment satisfies this element of the FCPA, it is not a necessary requirement. A mere offer, promise or authorization to pay is enough. Indirect payments are treated in the same way as direct payments. For example, the promise to pay an intermediary or agent, while knowing that all or part of the payment is to be offered or passed on to a foreign official, violates the FCPA to the same extent as an offer or payment made directly to the official. Moreover, simply approving a bribe may subject executives to prosecution for authorization, even where they have taken no part in the negotiation or payment of the bribe. 4. Money or Anything of value Although it is common for payments to be in cash or cash equivalents, charitable donations, golf outings, loans on preferential terms, sports equipment, reimbursements for expenses and other valuable items have been found sufficient to support a bribery conviction. Since the FCPA has no materiality requirement, there is no minimum requirement in determining this element. The amount of the payment may, however, be relevant to determining whether other elements, such as corrupt intent, are satisfied. 5. Foreign official The FCPA applies to any officer or employee of a foreign government (non-us) or any of its departments, agencies or instrumentalities, regardless of the person s rank or position. Determining whether a person is a foreign official is especially challenging in countries where it is uncontroversial or common for a person to work simultaneously for the government and the private sector. In deciding whether the recipient is a foreign official, the person s status under local law is especially pertinent. In addition the FCPA applies to political party candidates and employees, employees of government owned or controlled companies, employees of public international organizations and any other official capacity. The FCPA also applies when intermediaries are used. Practical guidance related to who is considered an official is given in chapter 8 of this Anti-corruption compliance program. 6. Corruptly : The Element of Corrupt intent. Corruptly was included in the FCPA to make clear the intent is an evil one, that is, that it is intended to wrongfully influence the recipient in the performance of an official act. Corruptly thus refers to the intention or purpose to obtain an improper benefit from the transaction. A corrupt intent may be present even if the purpose is not achieved. Although the analysis of whether a person has acted corruptly usually involves many facts, one of the most important is whether the payment is secret or made openly. 7. Prohibited Purposes of the payment The FCPA prohibits offers or payments of valuable consideration to a foreign official that are made for any of the following purposes: 1) influencing any act or decision of the official in his official capacity; 2) inducing the official to do or omit to do any act in violation of his lawful duty; 3) securing any improper advantage; or 4) inducing the official to use his influence with a foreign government to affect or influence any government act or decision. 8. Obtaining, Retaining, or Directing business The payment must assist a person or company in obtaining, retaining or directing business. This provision has been broadly interpreted to include almost anything that provides a business advantage to a person or company. This element is clearly satisfied when a payment is made to a government official to induce the award or renewal or to prevent the loss of a contract or concession but is also satisfied for other advantages such as speeding a customs clearance or reducing a tax assessment. Permissible payments The FCPA allows any facilitating or expediting payment to a foreign official... the purpose of which is to expedite or secure the performance of routine government action by a foreign official (facilitation payments). For a payment to fall within this exception, it must be intended to produce governmental action to which the payer is lawfully entitled without making the payment. The FCPA defines the term routine governmental action as an action that is ordinarily and commonly performed by a foreign official in obtaining permits, processing governmental papers, providing police protection, providing phone services, power and water sup

14 ply or action of similar nature. The term does not include any discretionary decision by a foreign official, such as a decision to award new business to a particular party. It is never a facilitation payment where local law orders the payment in question. It should however be noted that Statoil has a ban against facilitation payments. Reference is made to chapter 2 section 2.1 of this Anti-corruption compliance program. 4.3 Books and Records provisions The FCPA contains record-keeping and accounting rules aimed at prohibiting the establishment of suspect and undercover accounts used to finance illegal payments. For example, a company must make and keep books, records and accounts that, in reasonable detail, accurately reflect the transactions and depositions of the assets of company. Further, the FCPA requires that a company maintain a system of internal accounting controls sufficient to provide reasonable assurances of the propriety and legality of its transactions. For purposes of civil enforcement, these provisions are strict liability offences that mean that liability can occur even where there is no proof that the alleged wrongdoer acted with any particular intent or other state of mind. To establish a criminal violation, however, there must be proof that the actions were taken knowingly. Accordingly, it is much easier to prove civil violations of the FCPA s books and records provisions. All directors, officers, other employees, agents and shareholders acting on the issuer s behalf must comply with the books and record provisions or otherwise risk individual liability. The Books & Records provisions apply to non-u.s. issuers regardless of any connection to the United States as is required for application of the anti-bribery provisions. This is why US authorities are more likely to bring an enforcement action for books and records violations. 4.4 Penalties Anti-bribery provisions Civil violations of the anti-bribery provisions carry fines of up to $10,000 per violation for each entity and natural person, which may, in the court s discretion be increased up to an additional $100,000 for natural persons and $500,000 for business entities. Criminal penalties include both fines and imprisonment, with companies subject to fines of up to $2 millions and individuals subject to fines of up to $100,000 and five years imprisonment. Under the Alternatives Fines Act, issuers are subject to criminal fines of up to twice the gain obtained by making the corrupt payment. Under the current U.S. Sentencing Guidelines, which also apply to criminal penalties, companies found guilty will be fined, at a minimum, the amount of the bribe. Additional factors, such as the company s criminal history, size, any obstruction of justice as well as a company s compliance program and voluntary disclosure will either increase or reduce the fine amount. Fines imposed on individuals may not be paid by their employer or principal. Books and Records provisions Civil violations of the FCPA s books and records provisions are subject to the same penalties as other civil violations of the Exchange Act or the Securities Act of These include monetary penalties of up to: (i) $50,000 per violation by a business; (ii) $250,000 for each such violation by a business that involved fraud, deceit, manipulation or deliberate or reckless disregard of a regulatory requirement and (iii) $500,000 for each violation identified in sub-clause (ii) that directly or indirectly resulted in, or created a significant risk of, substantial losses to other persons. Such penalties may be increased up to the gross amount of pecuniary gain to the defendant, if this is greater. The FCPA limits criminal prosecution under the books and records provisions to knowing or willful violations. A criminal conviction carries with it fines of up to $5 million and imprisonment for up to 20 years for individuals and fines of up to $25 million per violation for businesses. The Alternative Fines Act and U.S. Sentencing Guidelines also apply to criminal violations of the books and records provisions of the FCPA. Disgorgement In addition to civil and criminal fines imposed for violating the FCPA, both the SEC and DOJ may claim payments of an amount equal to the gain obtained, or sought to be obtained, by the corrupt conduct

15 5.1 Corporate compliance function The Ethics and function5 Anti-corruption compliance The Ethics and Anti-corruption compliance function (CFO LEG COL), headed by the Corporate Compliance Officer, is part of Statoil s Anti-corruption compliance program and has the sole responsibility for all legal questions and evaluations related to anti-corruption compliance. The Ethics and Anti-corruption compliance function is one of several teams within the Corporate Legal Department (CFO LEG). In addition to the Corporate Compliance Officer, CFO LEG COL consists of several lawyers and ethics advisors. Contact details can be found on the Ethics and Anti-corruption webpage on Entry. The main responsibility of the Ethics and Anti-corruption compliance function is to ensure that activities to counteract corruption are well organised and conducted in a satisfactory manner. The Ethics and Anti-corruption compliance function is responsible for the following: 28 29

16 Governing documents Create and update the Ethics Code of Conduct (FR18) and other governing documents and information material related to ethics and Statoil s Anti-corruption compliance program. Training Develop ethics and anti-corruption training programs including orientation training for compliance officers. Be involved in development and review of all training programs that include elements of ethics and anti-corruption. Provide and oversee ethics and anti-corruption training, including training to Statoil employees seconded into another company or joint venture when required. Advice Advice on questions related to the Ethics Code of Conduct. Advice on questions related to prevention of corruption. Advice related to anti-corruption from the Ethics and Anti-corruption compliance function (including from the compliance network) related to interpretation and adherence to applicable anti-corruption legislation, governing documents or other relevant internal policies is binding. Deviations from such advice should be reported to the advising member of the Anti-corruption compliance function. Legislation Monitor developments in anti-corruption laws and treaties and other public policy documents applicable to any location where Statoil has activities or is planning to engage in activities. Ethics Helpline Follow-up and processing of calls to the Ethics helpline. Ethics Commitees Prepare the agenda for the Corporate Executive Committee Ethics Committees (CEC EC). Communicate the conclusions, as appropriate, from the CEC EC to the organization. Assist the secretariat for BA/CSO/CCOM Ethics Committees in preparing the agenda for the BA/CSO/CCOM Ethics Committees. A member of CFO LEG COL shall participate in the BA/ CSO Ethics Committee. 5.2 Corporate Compliance Officer The Corporate Compliance Officer heads the Ethics and Anticorruption compliance function in CFO LEG and works under the supervision of the General Counsel who has the ultimate responsibility within CFO LEG for ethics and Anticorruption compliance. The Corporate Compliance Officer may under certain circumstances report alleged corruption incidents to the Chief Executive Officer (CEO) and/or the Board s Audit Committee. The responsibility of the Corporate Compliance Officer includes the following functions: Compliance network Administer the Anti-corruption compliance program including the network of compliance officers. Participate in the selection and performance review of the compliance officers. Investigations Initiate and formulate the mandate for investigations related to corruption on behalf of the CEO and observe the development of such investigations. The Corporate Compliance Officer may also request Corporate Audit to initiate and continue investigations within specific areas if an investigation report is issued. Determine whether to retain external legal expertise to support investigations related to corruption. Report to governmental agencies when appropriate or required under applicable law, the initiative to investigate corruption or the results of such investigations. The Corporate Compliance Officer or other members of the Anti-corruption compliance function or the compliance network shall not participate as members of investigations teams related to corruption. Reporting Report activities and incidents to the CEO and/or the Board s Audit Committee. Regular reports of activities in the Corporate Executive Committee s Ethics Committees meetings. Ethics committee meetings Participate in meetings of the Corporate Executive Committee s Ethics Committees

17 Be entitled to meet in all business unit s and central staff s ethics committee meetings. Ethics Helpline Receive reports from Ethics helpline and provide advice on handling of corruption issues. Integrity Due Diligence Participate in the Integrity Due Diligence Review Board and the Integrity Due Diligence process as further outlined in WR2988. External contacts Be Statoil s official representative in external forums in respect of ethics and anti-corruption tasks. 5.3 Compliance Officers Each Business Area and central staff function manager shall designate as compliance officer one person with specific responsibility to focus on ethics and the Anti-corruption compliance program. Local compliance officers shall be appointed where regarded necessary. The Corporate Compliance Officer shall participate in the selection of and performance review of the compliance officers. The compliance officer will be part of the Ethics and Anticorruption compliance network. The compliance officer shall keep himself/herself updated on the relevant governing documents related to ethics and anti-corruption including Statoil s Anti-corruption compliance program. The responsibility of the compliance officer will also include the following responsibilities: Coordinate ethics and anti-corruption training and determine who in their respective business area should receive training. Advise line management on ethics and corruption issues in his/her business unit. Perform a secretarial function for business area and country office ethics committees. Participate in all business units and country offices ethics committee meetings, as applicable Ensure that business units perform annual assessments of corruption risk. Report any failures to comply with Statoil s ethics and anticorruption policies and regulations or applicable laws to the entity s management and to the Corporate compliance officer. Participate in Ethics and Anti-corruption compliance network meetings. Advise the Business Integrity unit (CFO LEG BIN) on operational experience with Integrity Due Diligence. The compliance officer shall be informed about investigations of breaches of alleged violations and corrective measures

18 Ethics committees 6 Ethics committees shall be set up within the Corporate Executive Committee (CEC) and in all Business Areas. The objective is to ensure high-level focus on ethical and reputational issues and to ensure a common understanding and practice within Statoil. Corporate Executive Committee Ethics Committee The corporate executive committee (CEC) ethics committee will meet at least every second month and at other times when required. The members of the CEC will participate, together with the corporate compliance officer (CCO) and the heads of the legal department (CFO LEG), corporate audit (COA) and corporate communication (CCOM). The head of the corporate human resources unit (CHR) will be entitled to attend the meetings. CFO LEG will act as secretariat for the CEC ethics committee. The CEC ethics committee will receive reports from the quarterly business area ethics committees. The agenda for the CEC ethics committee meetings will cover the following areas: Interpretation and refinement of ethics policy

19 Decisions on ethical dilemmas and ethical aspects of actual cases. Monitoring activities related to ethical questions, including training and implementation in the organization. Information about external cases and trends in ethics. Significant issues reported from the business area ethics committees or corporate audit. Assessment of compliance programmes relating to legislation against corruption, including Norwegian penal provisions and the FCPA. CFO LEG will prepare the agenda with assistance from CHR and CCOM. CFO LEG COL is responsible for communicating the conclusions of the CEC ethics committee to the organization. A report from the CEC ethics committee will be made every half year by CFO LEG to the board audit committee. Business Areas Ethics Committees The business area (BA), corporate staffs and services (CSO) and corporate communication (CCOM) ethics committees will meet at least every quarter and at other times when required. The members of the BA/CSO/CCOM management team will participate, together with the BA/CSO/CCOM compliance officer and the manager responsible for integrity and social responsibility in the BA/CSO/CCOM. A representative of CFO LEG COL will also participate. The BA/CSO/CCOM compliance officer will act as secretariat for the BA/CSO/CCOM ethics committee. The agenda for the BA/CSO/CCOM ethics committee meetings will cover the following areas: Interpretation of ethics policy in relation to BA/CSO/ CCOM activities. Decisions on ethical dilemmas and ethical aspects of actual cases. Monitoring activities related to ethical questions, including training. Issues discussed will during the course of a year cover all activities within BA/CSO/CCOM. CFO LEG COL will assist the secretariat in preparing the agenda. The secretariat is responsible for communicating the conclusions of the BA/CSO/CCOM ethics committee to the organization. A report from the BA/CSO/CCOM ethics committee will be made to CFO LEG COL so that significant issues may be reported to the CEC ethics committee

20 7.1 General Risk assessment 7 The guiding principle for anti-corruption risk assessment is to gain as early as possible in the business process a good understanding of local conditions and business culture and acquire sufficient knowledge of the actors with whom contact will be necessary. This will enable Statoil to effectively minimize its exposure to the risk of corruption through a process of early identification, prioritization and mitigation of the risk elements related to a project or business opportunity. In addition Statoil s procedures for Integrity Due Diligence will be an important tool for prevention of corruption. 7.2 Country Prior to Statoil starting up activities in new countries, it is a general requirement that an assessment should be carried out to show the extent to which the business, political and social environment in the country is characterized by unethical or corrupt practices. Reference should be made to reputable information sources and indicators, such as Transparency International s Corruption Perception Index, as well as mapping the existence, 38 39

21 quality and observance of local laws. Trends in the general environment with regard to corruption should be examined, to see whether these are positive or negative and an assessment should be made of the general outlook, the likelihood of meeting problems operating in the country and the degree of official support to be expected if Statoil should be faced with a serious issue. 7.3 Business activity The risk picture associated with the specific business activity should be assessed with particular attention to the main components and relationships, including business processes, partners, suppliers, agents, consultants, intermediaries, lobbyists, government and official bodies, local business practices and climate and Statoil s own employees. These elements of the risk assessment process are described in more detail in the following sections. 7.4 Risk analysis Each Business Area and central staff shall at least annually conduct a risk analysis in order to identify areas of potential weakness and exposure to corruption. A plan for combating and preventing corruption shall be presented to and discussed in the Ethics Committee of the Business Area or in relevant management meetings once a year. Examples of areas where corruption may occur are land purchase, procurement, cash and payment systems, customer service systems including fuel cards, transactions involving permits and licenses and any other activities involving reliance on third parties. A thorough understanding of the extent of government involvement in the industry will also be an important prerequisite for a proper risk assessment, as will reliable information on the reputation of the key players. This information will be important in assessing the likelihood of meeting corruption in dealing with state-owned or state-controlled partners and other parties. Any concerns identified should be followed up immediately. The risk assessment should also aim to understand the roles of individuals and organizations in government and official bodies and to determine the need for and desirability of contact as well as seeking to identify probable expectations on their part. 7.5 Partners, agents, consultants and intermediaries Before entering into an agreement with a partner, agent, consultant, lobbyist, subcontractor, supplier or intermediary, an integrity due diligence check should be carried out in accordance with Statoil s policy for integrity due diligence WR2988. This process provides for the identification and further examination of any integrity concerns or red flags. Assurance and obligation clauses should be included in agreements to ensure compliance with Statoil s ethics, sound and transparent business practices, appropriate compensation, transparency and openness of the relationship and compliance with all applicable laws. Once signed, the agreement should be followed up with continuous and active management of the relationship based on clear rules, in order to establish and maintain a high level of mutual understanding and awareness. This will assist in resolving misunderstandings and differences as soon as they arise and preventing engagement in or maintenance of any inappropriate relationship. 7.6 Employees The most important elements in risk assessment related to Statoil s own employees are a thorough and effective system for pre-employment verification and regular training and awareness programs to ensure the company s values and policies are understood and put into practice at all levels. Statoil has established a comprehensive anti-corruption training program that will be provided for all employees in high-risk areas of the business